TTC - Toro

[SlowAppreciation]

Has anyone done any research on Toro before? They're a manufacturer of things like turf/golf course maintenance equipment, lawnmowers, snow plows, etc. I own one of their competitors (PLOW, which I think is also a fantastic little company), which is how I found them. As I read through their 10k I came away thoroughly impressed, but am a little surprised to find little knowledge of them in the investing community.

 

They do $2.3b in sales, rock-steady 35% gross margins, $200m profit, 50% ROE, 25% RNOA, solid capital allocation, prudent acquisitions and in a slow moving industry. There's a lot to like.

 

The share price is about 30% over my estimate of intrinsic value, but it's one of those that I'll tuck away until a rainy day when I can buy it cheap. I'll share more here as I do deeper digging, but if anyone is already familiar with them, I'd love to pick your brain.

[SlowAppreciation]

Still no one following?

[LC]

i know the company (have seen their products on farms, parks, etc.)

 

couple of things:

1) everyone i know who uses these types of products (construction people, maintenance people, etc.) is often oddly emotionally attached to a certain brand. but the more of these people i've met, i find no logic to their attachment. a guy could have used a damn good makita drill 15 years ago and now that's all he buys. takeaway is i don't have much insight into the customer purchasing mindset.

 

2) this kind of goes hand-in-hand: i find product quality all over the map with these small/mid-size equipments. one year XYZ is making the best product, five years later (next purchasing time), ABC is making the best product.

 

3) they're not big/expensive enough to "lock in" customers to long contracts. think of the airplane or heavy construction service contracts.

 

i'm not saying it's a good company or good business, i just don't quite understand it well enough to jump in.